Presentation is loading. Please wait.

Presentation is loading. Please wait.

1 Doha, Qatar – 1 June 2004 Challenges and Opportunities in Financing the Current Expansion Phase in the Arab Telecom Industry Presentation made by NBK.

Similar presentations


Presentation on theme: "1 Doha, Qatar – 1 June 2004 Challenges and Opportunities in Financing the Current Expansion Phase in the Arab Telecom Industry Presentation made by NBK."— Presentation transcript:

1 1 Doha, Qatar – 1 June 2004 Challenges and Opportunities in Financing the Current Expansion Phase in the Arab Telecom Industry Presentation made by NBK to

2 2 Growth in mobile subscriber base in the Arab world has historically under-performed the global growth; however, projected growth is expected outpace global growth Source: Deutsche Bank 186% 80% Source: Arab Advisors Group estimates, EMC estimates 94% 100% Global Subscribers Arab Subscribers

3 3 The mobile market in the Arab world is currently under-penetrated compared to international peers Source: Arab Advisors Group estimates, EMC estimates, Gulf Investment Corp. estimates, NBK estimates Arab World Weighted Average Penetration Rate in 2003 is: 15% Peer Group Weighted Average Penetration Rate in 2003 is: 58%

4 4 Mobile penetration in the Arab world is expected to almost double over the next three years… Source: Arab Advisors Group estimates, EMC estimates, Gulf Investment Corp. estimates, NBK estimates

5 5 … leading to a doubling in the subscriber base Source: Arab Advisors Group estimates, EMC estimates, Gulf Investment Corp. estimates, NBK estimates Source: Arab Advisors Group estimates, EMC estimates, Gulf Investment Corp. estimates, NBK estimates Arab World Subscriber Distribution 2003 Arab World Subscriber Distribution 2006 Total Subscriber Base 33.3 million Total Subscriber Base 66.5 million

6 6 Subscriber base is expected to grow by 33.2 million to 66.5 million at year-end 2006, with the most rapid growth coming from North Africa Source: Arab Advisors Group estimates, EMC estimates, Gulf Investment Corp. estimates, NBK estimates

7 7 To cope with projected subscriber growth, mobile operators in the Arab world are expected to spend approximately US$ 8.3 billion over the next three years Source: NBK estimates

8 8 Out of the US$ 8.3 billion investments in network CAPEX over the next three years, only US$ 2.8 billion (or 34%) will be required from external sources  Over the next three years, we projected : subscriber growth of operators the internal cash generation of operators the dividend distribution levels of existing operators the network CAPEX requirements of operators the equity requirements of new operators Source: NBK estimates Network CAPEX Financing Sources Total Network CAPEX Requirements ( ) is equal to US$ 8.3 billion US$ 2.8 billion US$ 5.5 billion

9 9 The market structure in Arab world: We expect 3 new licenses and 3 existing regional licenses to become national between 2004 and 2006 CountryCurrent Market Comments Structure Saudi ArabiaMonopoly A new license is expected to be granted in H OmanMonopoly A new license is expected to be granted in H BahrainDuopolyMTC-Vodafone Bahrain commenced operations in Dec-2003 KuwaitDuopolyTalks about a 3 rd license. Market is too saturated to support new entrant U.A.E.MonopolyDespite recent announcements, 2 nd operator is not expected before 2007 QatarMonopolyMonopoly is expected to continue over medium-term IraqRegional Monopolies2-year licenses. Regional exclusivity expected to end at YE National coverage EgyptDuopolyTE bought 25.5% of Vodafone Egypt. TE restricted from GSM until 2007 AlgeriaCompetitive3 operators TunisiaDuopoly MoroccoDuopoly 3 rd mobile license might be bundled with new fixed line license expected in 2004 LebanonDuopolyGovernment owns mobile assets. Operators have management contracts only SyriaDuopolyA controlled duopoly JordanDuopolyTurnout for 3 rd license disappointing. Radio Trunking operator expected in 2H-2004

10 10 We expect the telecom sector to inject US$ 950 million in equity over the next three years Source: NBK estimates Equity Injection is equal to US$ 950 million Saudi Arabia*US$ 500 million OmanUS$ 100 million IraqUS$ 200 million MoroccoUS$ 150 million * Excludes any additional equity that may be required for financing license fees/costs for Saudi Arabia

11 11 The residual external financing of US$ 1.9 billion is expected to be funded through debt Source: NBK estimates Debt is equal to US$ 1.89 billion Source: NBK estimates External Funding Sources is equal to US$ 2.84 billion += Source: NBK estimates Equity Injection is equal to US$ 0.95 billion

12 12 We expect debt requirements in the telecom sector in the Arab world to amount to US$ 1.89 billion over the next 3 years, coming mostly from newly established operators NORTH AFRICA US$ 660 MM + GCC* US$ 330 MM + THE LEVANT US$ 240 MM + EGYPT US$ 390 MM Bank Borrowing & Debt Securities Vendor Financing + IRAQ US$ 270 MM Sources of Debt Source: NBK estimates * Excludes any debt that may be required for financing license fees/costs for Saudi Arabia

13 13 We see no financing challenges in the Arab mobile telecommunication sector over the next three years. Banks should not expect a significant rise in lending to telecoms … Operators are cash rich, especially in the GCC Incumbent mobile operators have strong and sustainable cash flows from operations New market entrants are sponsored by regional and international operators with strong balance sheets and high negotiation power with suppliers, especially when it comes to vendor financing Reason 1 Reason 2 Reason 3

14 14 … however, financial institutions can play other important roles in the telecommunication sector in the Arab world Provide financial advisory services in M&A transactions Provide operators with acquisition finance Provide capital restructuring advice and financing Role 1 Role 2 Role 3 Provide placement services through IPOs Role 4

15 15 The NBK’s experience with MTC: Selected transactions Financial advisory services Acquisition finance Capital restructuring advise & finance US$ 424 million acquisition of Fastlink by MTC Jan 2003 Apr 2003 The Second Mobile License in the Kingdom of Bahrain Oct 2003 The 2-year Mobile License in Iraq Dec 2003 The contemplated acquisition of the 2 mobile businesses in Lebanon Jan 2003 Arranged US$ 300 million in acquisition finance to acquire Fastlink Jan 2004 Advised MTC on the optimal capital structure of Fastlink


Download ppt "1 Doha, Qatar – 1 June 2004 Challenges and Opportunities in Financing the Current Expansion Phase in the Arab Telecom Industry Presentation made by NBK."

Similar presentations


Ads by Google